Member Info for PUTUP

Of course the (first) article omits to highlight and take into account that the oil is sold at a significant $23.2 discount to Brent and, of course, that the Profit Oil is split 61.5% GKP, 18.5% MOL and 20% KRG. So for each barrel of profit oil (the company makes no margin at all on cost oil) sold when Brent is $90 GKP gets about $10 currently (assuming an R factor around today's level yielding a WI profit oil share of 28%). And that share steadily falls over time. From this $10 per barrel it must pay all its non-recoverable costs.

Defo long time ;)

"I reckon it's pushed back to end of Q1 and maybe beyond that, depending on whether there are any more capex commitments this year. "

Have a look at the updated figures in the 1H results for the gross CRP. I reckon, assuming $90 Brent in 4Q (and using the midpoint of guidance for 2H capex $73 million) it's pushed only to January 2023 (production - received with a lag). At any rate, still very near term. Of course if Brent is higher and/or production exceeds my (revised) assumptions it will be sooner.

Note, also, that the company can spend $73 million in capex in six months ($146 million annualised) and still be reducing the CRP. It's not hard to find the maximum monthly capex and recoverable operating cost figure that can be 'absorbed' by the company without running up a CRP balance (assuming a particular base level of production and Brent oil price). Compare this with the guidance given as to the cost and time period for the next phase of investment (aka the FDP). Quite manageable. The cost of the investment borne by the contractor (rather than the KRG) is simply the (much smaller) lost share of what would otherwise have been profit oil. It's worth working that out also. Then you understand what the company really invests in return for greater future profitability.

Enjoy the weekend!

They have always responded to my enquiries... Give it a go.

Ask the company and let us know

"And are ‘water handling facilities’ to enhance existing production up to 55k bopd, or are they related to the next phase? Or both? "

I understand they're principally (or primarily if you prefer ;)) to address the issues in existing wells. One will have to wait and see re SH-16. Hopefully we start seeing some growth in production soon...

You guys crack me up. You provide great sport. Keep it up!

BTW Straycat, how's your investigating into the shareholder analysis going?

Yes ValueS - I was merely being more accurate on the definition of Revenues. Net to GKP = Revenues - CBC (withheld)

ValueS

'net to GKP' is the revenue (well, actually, revenues are pre CBC which is deducted as cost of sales) from which they pay costs and investment.

You have that cash already. It's in the stock price. It's the easiest part for investors to model/assume and rely on. (The bit that's hard and bounces around a lot is the value of the future income stream.) It's also the easiest part to remove from the valuation when it is paid out to investors. In other words, it's in the stock price today and when it's paid out it won't be anymore. Zero sum game (except, depending on your circumstances, the tax man might take a slice of it on distribution).

DRB83 - they don't get any easier than that. It's just the PSC. It's at the very core of the company. Don't learn it at your peril.

Yes it is and you ought to understand why. Almost everything you need to know is embedded in the example I provided. Work through it until you understand it fully.

A 2023 example. Change the assumptions as you see fit. (Add any residual CRP left at end of this year's sales - but this is modest)

Brent 90
Discount 23.2
Sale Price 66.8
Less 10% royalty 6.68
Net Sale Price 60.12
Average daily production 48,000
Gross Oil Sales $m 1,053
(a) Contractor Direct Operating/Lifting Costs 54 $3.10 per barrel of which 80% is GKP
(b) Contractor Direct Shaikan G&A 5.125 GKP booked $4.1m 2021
(c) Contractor Capex 150
Cost recovery 209 * Cost recovery limited to this year's capex and direct costs if historical CRP depleted
GKP Share Cost Recovery 168
Total Profit Oil 844
Working Interest share profit oil 190 22.5% 30% declining to 15% with R factor
GKP share profit oil (61.5%) 117
less GKP CBC (20%) (23)
Net to GKP per annum 261
(d) Corporate G&A 10 GKP booked $9.5m for 2021
(e) Interest 0
GKP Cashflow Generation 83 = Net - 80% of (a, b and c) - d -e

Focus on cash generation. How much cash do you expect them to generate next year? (state your assumptions)

Given continued disappointment re production and the cash exiting the business via dividends the stock is cheap but not by much. It's helped a lot by the falling £.

LOL. Trailing PE is a really, really stupid metric for a company like GKP due to the distortion of earnings from the CRP recovery.

Yes the results sucked. I'm disappointed and having to revise down yet again my expectations for this year due to the much lower than anticipated production volumes. The increase in 2H capex coupled with lower production (and lower Brent) has pushed out CRP recovery in early 2023 (previously October '22). They'd better have a cracking 4Q else they will be at the low end of annual production guidance. The main factor propping up my view of fair value is the collapsing £. I'm glad I sold some at 315p pre dividends. The yield since then has been very disappointing.

zedy, you really should back up your ramping here and on Twitter with a better understanding of the fundamentals driving the company. Many times now people here have shown how to calculate monthly receipts to within 5% (or better) accuracy. It isn't difficult to apply the same to a full year. (365 days vs the number in the relevant month.) It's easy then to subtract from that receipt estimate the outgoing costs incurred by the company (direct costs per barrel, capex, direct Shaikan G&A, plus unrecoverable head office G&A costs - all needed to derive the receipt estimate) and get the free cash flow that will generated by the company according to those assumptions. That's the only cash from which the company can pay dividends.

"Updated on how the previous fixed $21.1 reduction per barrel now includes a variable bit based on PoO (Brent)"

It's 'interesting' that they keep making adjustments for 2021 related to this. First we had:

"The payment for January 2022 sales reflects adjustments proposed by the KRG to pipeline tariff charges,
which are now linked in part to Dated Brent. The total payment also includes a one-time gross adjustment of 
$1.0 million ($0.8 million net to GKP) related to a backdated pipeline tariff increase for 2021."

And now we have:

"for Shaikan crude oil sales during May 2022 and a gross adjustment of $2.1 million ($1.6 million net to GKP) related to a backdated pipeline tariff increase for 2021."

How many more adjustments for 2021 to come?

FWIW I have been using $21.2 which is the last used by the company (pre the impact of changes to pipeline tariffs).

Like a slinky heading down a set of stairs

Record receipts: peaked for June production. Unlikely to exceed that level for many, many months if not years (Opu's $65m a month is a pipe dream)
Production: this is the important one. We're still nowhere near 55k. Last published figure 45,900. What progress has been made?
Dividends: don't create value

Hopefully John has a lot that's good to say about item 2.

Layers in the same onion. Shareholder analysis has many layers. For example, even an institutional fund like Blackrock. First layer is simply Blackrock. Further, and much more important, layers down are the actual funds holding the stake, each with potentially very different motivations (either passive or active) for holding a stake and different managers of those funds. If the company IR wanted to pitch the investment case to Blackrock it doesn't pitch head office. It needs to get to the underlying decision makers. But publishing that degree of analysis on their website is not required.

With respect to Acadian, the interest was highly likely at Acadian all the time. Prior analysis didn't peel a layer. When Brightsphere (the parent holder) sold its other operating subsidiaries leaving only Acadian (link below) it's likely much easier to label the holder as Acadian. Now which funds (with what mandates) within Acadian own the stake? (Are there different managers or simply one? More layers.) Who owns the funds?

You can do the same with Precision Capital/InsingerGilissen Bankiers NV/Ophorst Van Marwijk Kooy Vermogensbeher and others. An initial investigation only shows the custodial holder. More digging over time reveals the ultimate beneficiary.

Recognise also that such shareholder analysis is often dependent on receiving accurate and informative answers to questionnaires.

The company publishes a very high-level 'analysis'. More detail is no doubt available for a fee.

Take a look. It won't annoy my principals - I have none (as opposed to principles). Oftentimes the right answer is the one that fits the facts most easily rather than any conspiracy the mind might conjure.

If you are going to spend time digging I'd start with looking more deeply at shareholder #1...

https://ir.bsig.com/investor-relations/news/news-details/2021/BrightSphere-Investment-Group-Inc.-Completes-Sale-of-Affiliates-Thompson-Siegel--Walmsley-LLC-and-Investment-Counselors-of-Maryland-LLC/default.aspx

Acadian are still there 3.97%

Sothic was a distressed debt fund. They acquired the stake in the restructuring. It distributed its assets to the GPs and LPs of the fund and basically closed down. That left Mr Koomen with his personal share of 4.7% now reduced to 4.57%. Clearly no other GP/LP received a stake big enough to require notification. No mystery there.

There is no abnormal shareholder visibility issue.

Surreyscot thinks M&A bankers are scum. What he doesn't realise is that M&A bankers get hired by showing opportunities to potential acquirors and building a reputation for high quality execution if and when those 'buy-side' mandates are won. You can rest assured that companies such as GKP have been profiled in many a banker pitch book. So far it doesn't look like there's been many, if any, takers. The other way to get hired is when the company and its key shareholders decide they need to put it on the block and hire someone (a 'sell-side' mandate) to shop it around (even when it may have been shopped already informally as part of a potential target pitch deck). I would not be at all surprised if feedback given by potential buyers, if any, is that they need (at the very least) better clarity on resolution of the dispute between Erbil and Baghdad. And why would the company initiate a process from a position of weakness with a background of such dispute, weak performance with respect to production and no FDP? Key shareholders are recovering large chunks of their investment via CRP dividends (and, it would appear from the latest analysis, some selling into strength). They're highly unlikely to be pushing management to put the company on the block now while big issues (oil law dispute and FDP) remain. So I'd say a takeover offer anytime soon is remote.

That doesn't mean it won't happen one day. I wouldn't, however, invest in GKP on the basis of anything happening within my investment time horizon. And what might an acquiror pay? They will understand and be advised as to the details of the PSC and just how GKP earns its share for the execution of the field's development. Even if they paid up front for the current production and that added by the next FDP, something with all its risks to be executed (once given the go-ahead) over a 3-4 year period, one wouldn't get to a valuation twice the current one without assuming a very high price of Brent for the next 5 years.

Too many here are grasping at any silly little thing they can find to keep touting the imminent takeover mantra. Hop on the bandwagon if you must, but do so at your own great risk.

You guys can dream all you want about a takeover, but right now the share price is 261.50p. What are you going to do about it?

For example, re #5 https://www.vermogensbeheer.nl/ophorst-van-marwijk-kooy-vermogensbeheer/?gclid=Cj0KCQjw0oyYBhDGARIsAMZEuMtRmZlWtgsMOj0dFAcWi1TvckH9hKXfbQuLfieBxezQDMyDdN6GYVUaAslJEALw_wcB

Scroll down to "Depotbank(en)"

A little more digging (Google is your friend) will tell you that Stichting Value Partners Family Office is controlled by Mr Hendrik Marius van Heijst. You can go on from there.

The analysis has simply dug a little deeper into these names to get a little closer to the beneficial owners. (Conspiracy theories need not apply.)

This has been discussed already. No new entry. #2 was previously reported as F van Lanschot Bankiers. And #5 was previously reported as Precision Capital/InsingerGilissen Bankiers NV.